With its ramshackle colonial buildings, Suva once had a steamy, faded allure, and a dynamism rare among the often troubled Pacific island states. Fiji had a competent democracy, a vibrant economy built on garment-making, sugar and tourism and a reliable Army known for its contributions to international peacekeeping from East Timor to Rwanda. Now, for the second time in 13 years, Fiji faces violence by native Fijians against the local Indians, who dominate the economy. By late last week it was all the Army could do to make peace at home. In talks over bowls of kava, a ritual grog, the military leader, Frank Bainimarama, appeared close to persuading Speight to free Prime Minister Mahendra Chaudhry and 29 members of his cabinet, held hostage in Parliament since May 19. But Suva was a mess.

Gangs trashed stores run by Indians or catering to the rich. They looted big supermarkets, Calvin Klein, Gucci–160 businesses in all. Estimated damage: $15 million. The TV station was ransacked. Nightspots were struggling under martial law and an 8 p.m. curfew. The Army also suspended the Constitution and accepted the president’s resignation to satisfy Speight’s demands. Fijians were unnerved. “I wouldn’t say to my friends, ‘Hey, let’s go out for a drink tonight’,” says Jese Sikivou, a leading businessman. “I would say, ‘Folks, get your butt home’.”

Trade is at a standstill. Foreign investment projects “are all in the air,” says Meli Malani, Fiji’s trade commissioner in Sydney. Few Indian businesses are left open. The Indo-Fijian owner of an electronics shop, having lost more than $100,000 in merchandise to the looters, is thinking of leaving. “The economy is going to die down to zero,” says the shopkeeper. Foreign governments are threatening to suspend ties with Fiji. Ousted president Ratu Sir Kamisese Mara warns that Fiji could wind up alongside Burma at “the worst end of the pariah list.”

Fijians have been through this before. Indians, now 44 percent of Fiji’s population, arrived here a century ago, imported as plantation workers by the English colonial masters. After independence the Indians’ growing prosperity gave rise to a Fijian-power movement known as Taukei. In 1987 a pro-Taukei Army officer overthrew the Indian-led government and rewrote the Constitution to ensure Fijian supremacy. The regime cracked down on Indians in various ways, like forcing Hindu businesses to close on the Christian Sabbath. The British Commonwealth suspended Fiji. Indians began fleeing the country, forcing Fijians to reconsider Taukei. In 1997 a new Constitution restored Indian political rights.

That opened the door for Chaudhry to take power in 1999. He was a quick flop. Indian businessmen thought he mishandled the economy; Fijians thought he favored Indians in land-ownership disputes. The discontent gave Speight reason to think his ethnic revolt might succeed–but many Fijians seem to think Speight is in it for himself.

Speight clearly enjoys the boss role. On Friday he said the Army had agreed to submit two options to the powerful Great Council of Chiefs: leave the Army in charge while a new constitution is drafted or install a new Parliament and Speight as prime minister. On the silent streets, it seemed Speight had done quite enough for Fiji already.